Did you make a profit from forex this week? I hope you did. Do remember that forex is not a path to instant riches! Slow and steady wins the race.
In the previous EUR/USD Weekly Review, we noted from a technical analysis point of view that the SMA 20 is still above the SMA 50 and hence a cross over would be more of a confirmation. Furthermore the previous upper trendline of a bearish channel continues to provide a sizable support for any bearish exploitations. From a fundamental analysis point of view, both the American and Euro Zone economies face respective challenges and the recoveries face the threat of a derailment.
Technical Analysis:
Looking at the EUR/USD Daily chart above, as mentioned last week the upper trendline of the previous bearish channel continues to function as a support. The currency pair bounced off the line and embarked on a bullish climb towards 1.46. This was also a result of the region of 1.42 holding it's fort.
SMA 20 = Downwards, flattening
SMA 50 = Downwards, flattening
I mentioned previously that having the SMA 20 crossing below the SMA 50 in a bearish momentum would be a stronger confirmation. It did not happen and since then, the EUR/USD had climbed into an ascending momentum. The SMA 20 is now above the SMA 50 and i will be looking out for both SMA 20 and SMA 50 to round the bottom and point upwards. As the 1.46 region is a strong support area, care must be employed. Early June also saw the EUR/USD failing to penetrate this region.
Fundamental Analysis
The bullish momentum of the EUR/USD and the ease at which it flew past 1.44 suggested that sentiments might be improving.
Earlier in the week, Greek Prime Minster garnered enough votes to implement the first phrase of an austerity plan. This was a relief as it meant that the European Union EU and the IMF will probably disburse further aid. I mentioned that the markets were pretty much going with the flow of the Greek budget deficit crisis and indeed the markets were. The US S&P 500 gained much too as a result of improved risk appetite due to the reduced risk of a Greek default.
Further positive developments were reported as the Euro Zone approved the aid disbursement to Greece. This was a big relief and the Euro Zone also pledged to push on for a formation of a new bailout package to further move the country away from a default. These actions give the markets the confidence that the Euro Zone will probably draw the line at the possibility of a default. Next focus will be the IMF's share of the assistance.
Across the English Channel, the pound declined to a 15 month low against the Euro as growth outlook for the UK economy falls. Manufacturing growth unexpectedly fell in June.
The US Non-Farm Payroll is due this Friday and caution is advised since the US employment market remains unstable.
Trade Safely.
Related Forex Articles from the Koala Forex Training College.
- Making use of moving average indicators
- US Non-Farm Payroll Review 3 June 11
- The US Unemployment Crisis
Read more about the EUR/USD at my buddy's great blog.
Forex Crunch writes a weekly EUR/USD outlook. It is a very popular write up and he is one of the best.
